Airbnb’s valuation nearly touched $100 billion on a successful first day of trading on the NASDAQ exchange. While the price for shares in the travel and home rental platform was set at $68 per share, trading volumes doubled on Thursday during the initial public offering (IPO). The company’s stock clossed at $144.71 at the end of trading, up by 113% from the offer price. Airbnb’s market value stands at $86.3 billion, making it the biggest online travel company.
At $68 per share, Airbnb’s valuation at the time of listing was $47 billion. But after prices soared to $165 by mid-day, its valuation touched the $100 billion market. In its prospectus, filed earlier last month, the company said that despite the widespread impact of the pandemic on the travel and home rental industry, its business model remained resilient. “We believe that the lines between travel and living are blurring, and the global pandemic has accelerated the ability to live anywhere. Our platform has proven adaptable to serve these new ways of traveling,” it said.
According to Bloomberg, Airbnb’s co-founder and chief executive officer, Brian Chesky’s own stake in the company is estimated to be around $11.4 billion post the IPO debut. In an interview with CNBC, ahead of the IPO Chesky said, “I don’t think I am going to worry much more, in April and May when we saw our business drop 80% in 8 weeks in the middle of the pandemic. I am so grateful to be here today, so fortunate and I wouldnt be here for all the people who helped us, our guests, our hosts and everyone that has helped build Airbnb.”
In the wake of the pandemic, the company had to lay off 1,900 employees or 25% of its full-time staff and cut all discretionary marketing spends and employee bonuses for the year. The company also had to raise fresh funds this year totaling $2 billion, half of which came through a syndicated loan.
As of September 2020, the company had more than 4 million hosts, around 7.4 million available listings of homes and experiences, of which 5.6 million were active listings. The company estimates that the market opportunity to be worth $3.4 trillion, which includes $1.8 trillion for short-term stays, $210 billion for long-term stays, and $1.4 trillion for experiences. During the first nine months of this year, Airbnb posted a net loss of $697 million on the back of $2.5 billion in revenue. In the previous year, it made a loss of $323 million on the back of $3.7 billion in revenue during the same period in the previous year.
Since the company has reserved $238 million worth of stock for hosts on its platforms, these home owners have seen their investments double in just one day. However, many of its hosts are suing the company in a class-action lawsuit door to poor handling by the company when guests began cancelling their bookings in the wake of the pandemic. The company had to invoke an Extenuating Circumstances policy which overrode the hosts’ refund policies and therefore, denied compensation to hosts for cancelled bookings.